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5 Blue-Chip Stocks to Avoid

Stocks in this article: IBM GE TU TWX RIMM

IBM

First up is IBM (IBM) the $224 billion technology giant that's clawed its way 5.8% higher since the first trading day of 2012. IBM has a lot of fundamental factors in its favor longer-term, especially as corporate IT departments shovel cash at cloud computing. But for now you'd be wise to stay away thanks to a double-top that's been forming in shares.

IBM hit resistance twice at $207.50, first back in late March, then again at the start of May. What makes those two tops a big deal for investors is the fact that IBM closed below its breakdown level (the intermediate trough between the two peaks) yesterday. While the break isn't yet confirmed at this point, it's a big enough red flag that folks thinking about buying IBM should sit on the sidelines.

>>5 Stocks to Buy Instead of Dell

Confirmation would come from a move lower in today's session -- but even if IBM bounces today, I'd suggest staying away from shares for now. A downside target near the 200-day moving average looks like a much more attractive entry point instead.

IBM is one of Warren Buffett's holdings. (Also see " 5 Stocks to Buy to Be Like Buffett.")

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